INSURANCE - CH. 1 DEFINITIONS
QUESTIONS WITH VERIFIED ANSWERS [
GRADED A+]
Insurance - ✔✔contract that transfers the risk of financial loss from an
individual or business to an insurer
Risk - ✔✔uncertainty about whether a loss will occur
Why does life insurance include risk even though death is absolute? -
✔✔the timing of that loss is uncertain
©morren2024/2025.Year published 2024.
,Types of risk - ✔✔1. speculative
2. pure
Speculative Risk - ✔✔loss or gain can occur - not insurable
examples of speculative loss - ✔✔gambling, investing
pure risk - ✔✔only loss can occur - insurable
examples of pure risk - ✔✔car accident
loss - ✔✔reduction in value of an asset
©morren2024/2025.Year published 2024.
, exposure - ✔✔risks for which the insurance company would be liable
peril - ✔✔cause of loss
hazard - ✔✔anything that increases the chance that a loss will occur
type of hazards - ✔✔1. Physical
2. Moral
3. Morale
physical hazard - ✔✔physically identifiable factors that increase chance
of loss
©morren2024/2025.Year published 2024.
QUESTIONS WITH VERIFIED ANSWERS [
GRADED A+]
Insurance - ✔✔contract that transfers the risk of financial loss from an
individual or business to an insurer
Risk - ✔✔uncertainty about whether a loss will occur
Why does life insurance include risk even though death is absolute? -
✔✔the timing of that loss is uncertain
©morren2024/2025.Year published 2024.
,Types of risk - ✔✔1. speculative
2. pure
Speculative Risk - ✔✔loss or gain can occur - not insurable
examples of speculative loss - ✔✔gambling, investing
pure risk - ✔✔only loss can occur - insurable
examples of pure risk - ✔✔car accident
loss - ✔✔reduction in value of an asset
©morren2024/2025.Year published 2024.
, exposure - ✔✔risks for which the insurance company would be liable
peril - ✔✔cause of loss
hazard - ✔✔anything that increases the chance that a loss will occur
type of hazards - ✔✔1. Physical
2. Moral
3. Morale
physical hazard - ✔✔physically identifiable factors that increase chance
of loss
©morren2024/2025.Year published 2024.
